The Long Tail Risk that faces the Worlds' Greatest Industrial Cluster – China's Guangdong Province

Why Nuclear Energy is on a secular decline

Nuclear Energy provides more than 15% of the world’s electricity requirements and is much cheaper than other renewable sources of power such as solar and wind energy (at least the old plants).  The developed countries account for most of the nuclear power reactors with France getting more than 80% of its power from nuclear power plants. However, things have been pretty bad for nuclear energy in the last couple of decades. The costs for building new power plants have escalated and protests against them by local communities have increased. The Fukushima disaster highlighted the disadvantages of nuclear energy and many countries such as Germany, Switzerland and Belgium have either shut all their nuclear power plants or are in the process of doing so. The tail risks of nuclear power plants are enormous as a fault or a problem with a nuclear reactor can lead to extremely large losses for life and property. Radioactive leaks can destroy a huge area for many years and lead to billions of dollars in losses.

Read about Nuclear Energy Advantages vs Disadvantages.

India and China are powering the Nuclear plant growth

Now local communities have started to protest vigorously against new plants. India and China are the 2 countries having the greatest nuclear expansion plans and both are facing huge opposition. The new Indian nuclear energy plant as Kudankulam has seen many protester deaths and huge delays. It took the combined might of the Indian federal government and the Supreme Court to browbeat the protesters who have not given up. Other nuclear plant locations in India such as Jaitapur have also seen huge protests. One wonders whether the government would not be better off spending its financial and political capital on other safer forms of renewable energy.

China’s Guagndong province has become the world’s biggest industrial cluster and forms the nucleus of China’s position as the world’s greatest industrial nation. The fertile Peal River Delta has flourished in the last two decades and both Hong Kong and Macau have benefited from the tremendous growth in the region. However, the region suffers from a big unappreciated tail risk. There are already 5 nuclear reactors in this fertile densely populated region and many more are being planned in the next decade. China plans to multiply its nuclear power capacity by almost 5 times from the 10-12 GW currently. However, it may not be a good idea as it will also multiply the risk of a nuclear accident. There has already been a couple of incidents in the past. China is not known for its safety and disclosure standards. Major industrial pollution  accidents have taken place in the past. A $6 billion uranium processing facility in the region saw huge protests by locals forcing two Chinese nuclear heavyweights to back down. It was surprising that the nuclear facility plan was abandoned so quickly.

China has been pushing ahead with nuclear energy as it desperately needs to find alternative sources for thermal power. China consumes almost half of the worlds’ coal, to power hundreds of polluting thermal power plants. China has been pushing hard for increased wind and hydro power capacities. It also needs gigawatts of nuclear power to reduce the pollution from thermal power. I don’t think it’s a good idea for China to build more nuclear power plants in the densely populated region. An accident here could throw China’s whole industrial sector into disarray and cause so many losses that it will make Fukushima look like a picnic.

HK protests against China’s Nuclear leak

There are some clouds on the horizon with one of China’s oldest reactors located in Guangdong province near Hong Kong suffering from a minor leak raising concerns. Though the leak was reported as minor, it reminds people of the extreme hazards of Nuclear Accident like the Chernobyl Incident which has a continent wide affect. It would again strengthen the NIMBY protests by local residents.

Kudankulam Protests in India

Recently protestors were killed by police in Andhra Pradesh as well. The Government has blamed foreign NGOs for fomenting the violence in Kudankulam but the fact is that nuclear power protests are being seen everywhere in India where citizens are not enamored of nuclear power like the country’s PM. In fact even with all the planned expansion of nuclear energy, the contribution of nuclear energy to India’s electricity will still be in the low single digits. Besides the cost of nuclear energy in recent times has risen prohibitively, making nuclear power plants uneconomical in the developed countries where the emphasis on safety is much greater.